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Stocks sag as coronavirus kills nearly 200, safe-haven assets gain

By Amanda Cooper

Global stocks fell as the death toll from the coronavirus neared 200, while the Swiss franc and gold rallied

Global stocks fell as the death toll from the coronavirus that erupted in China neared 200, while on the broader markets, perceived safe-havens such as the Swiss franc and gold rose. Litecoin also bucked the gloomy trends of the day, rising 10 per cent on the dollar to trade at four-month highs.

The outbreak of the disease that started in the central Chinese city of Wuhan has now spread to more than 8,000 people globally, surpassing the 2002-2003 SARS epidemic, according to Reuters.

Chinese authorities said the virus, which infects the respiratory tract, has now killed 170. Cases have been reported in 18 countries, but, as yet, there have been no deaths outside China.

Shares in airlines, many of which have grounded flights in and out of China, fell, along with prices for economically-sensitive raw materials such as oil and copper.

The European stock markets were a sea of red, with the exception of Madrid’s IBEX 35.

In London, a slump in quarterly profits at oil major Royal Dutch Shell, coupled with a slide in shares of telecoms group BT, which delivered results that were slightly below expectations. BT also warned that the UK government's new guidance on the use of Huawei equipment in its rollout of 5G mobile will have a 500 million-pound impact. This left the FTSE 100 1.36 per cent lower at 7381.96 points by the close.

In Frankfurt, the DAX fell 1.41 per cent to 13,157.12, with most blue-chip stocks bar Deutsche Bank in negative territory. Deutsche Bank, the country’s largest bank, reported a larger drop in earnings than expected in the fourth quarter, but investors largely shrugged off the news, pushing its shares up by nearly 4 per cent.

The World Health Organisation met on Thursday to discuss whether the spread of the coronavirus equated to a global health emergency. The WHO will hold a press conference at 1830 GMT.

“How will the market react? It should be priced in but the market is struggling to get a handle on the scope and scale of this virus so there's an element of headline shock that I think could sour the mood,” said ForexLive chief currency analyst Adam Button.

The Swiss franc, traditionally seen by investors as a store of value in times of market uncertainty, rose by 0.5 per cent against the US dollar to 0.968 francs, marking its biggest one-day gain so far this year and by 0.3 per cent against the euro, touching a 33-month high.

The pound rose by 0.6 per cent against the dollar and 0.4 per cent against the euro after the Bank of England surprised markets slightly by keeping US interest rates unchanged at 0.75 percent.

Outgoing governor Mark Carney noted an improvement in the British economy towards the end of the year, but the central bank’s forecasters cut their estimates for UK growth this year and next, effectively leaving the door open for more rate cuts.

Gold, meanwhile, rose by 0.4 per cent to $1,583 an ounce. The price has risen by nearly 5 percent in January, driven in part by concern over the broader economic impact of the coronavirus.

Crude oil fell by around 2 percent on the day to three-and-a-half month lows around $52.32 a barrel, bringing losses for the month so far to almost 13 per cent, while copper futures dropped 1 per cent to $5,587.25 a tonne.

In cryptocurrencies, Litecoin shot up by more than 10 per cent on the day to around $66 a coin, its highest since mid-September.

FURTHER READING: Bank of England leaves UK rates on hold after “Boris bounce”

FURTHER READING: Coronavirus: BA suspends China flights as evacuation race begins

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